26 U.S. Code § 853 - Foreign tax credit allowed to shareholders

(1)more than 50 percent of the value (as defined in section 851(c)(4)) of whose total assets at the close of the taxable year consists of stock or securities in foreign corporations, and

(2)which meets the requirements of section
852(a) for the taxable year,

may, for such taxable year, elect the application of this section with respect to income, war profits, and excess profits taxes described in section
901(b)(1), which are paid by the investment company during such taxable year to foreign countries and possessions of the United States.

(b) Effect of election

If the election provided in subsection (a) is effective for a taxable year—

(1)the regulated investment company—

(A)shall not, with respect to such taxable year, be allowed a deduction under section
164(a) or a credit under section
901 for taxes to which subsection (a) is applicable, and

(B)shall be allowed as an addition to the dividends paid deduction for such taxable year the amount of such taxes;

(2)each shareholder of such investment company shall—

(A)include in gross income and treat as paid by him his proportionate share of such taxes, and

(B)treat as gross income from sources within the respective foreign countries and possessions of the United States, for purposes of applying subpart A of part III of subchapter N, the sum of his proportionate share of such taxes and the portion of any dividend paid by such investment company which represents income derived from sources within foreign countries or possessions of the United States.

(c) Statements to shareholders

The amounts to be treated by the shareholder, for purposes of subsection (b)(2), as his proportionate share of—

(1)taxes paid to any foreign country or possession of the United States, and

(2)gross income derived from sources within any foreign country or possession of the United States,

shall not exceed the amounts so reported by the company in a written statement furnished to such shareholder.

(d) Manner of making election

The election provided in subsection (a) shall be made in such manner as the Secretary may prescribe by regulations.

(e) Treatment of certain taxes not allowed as a credit under section
901

This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section
901 by reason of subsection (k) or (l) of such section.

(f) Cross references

(1)For treatment by shareholders of taxes paid to foreign countries and possessions of the United States, see section
164(a) andsection
901.

Pub. L. 111–325, § 301(c)(1)(A), which directed amendment by substituting “so reported by the company in a written statement furnished to such shareholder” for “so designated by the company in a written notice mailed to its shareholders not later than 60 days after the close of the taxable year”, was executed by making the substitution for “so designated by the company in a written notice mailed to its shareholders not later than 60 days after the close of its taxable year” in concluding provisions to reflect the probable intent of Congress.

2005—Subsec. (e). Pub. L. 109–135amended heading and text of subsec. (e) generally. Prior to amendment, text read as follows: “This section shall not apply to any tax with respect to which the regulated investment company is not allowed a credit under section
901 by reason of section
901(k).”

1998—Subsec. (c). Pub. L. 105–206, § 6010(k)(2), struck out at end “Such notice shall also include the amount of such taxes which (without regard to the election under this section) would not be allowable as a credit under section
901(a) to the regulated investment company by reason of section
901(k).”

1997—Subsec. (c). Pub. L. 105–34inserted at end “Such notice shall also include the amount of such taxes which (without regard to the election under this section) would not be allowable as a credit under section
901(a) to the regulated investment company by reason of section
901(k).”

Amendment by Pub. L. 111–325applicable to taxable years beginning after Dec. 22, 2010, see section 301(h) ofPub. L. 111–325, set out as a note under section
852 of this title.

Effective Date of 2005 Amendment

Amendment by Pub. L. 109–135effective as if included in the provision of the American Jobs Creation Act of 2004, Pub. L. 108–357, to which such amendment relates, see section 403(nn) ofPub. L. 109–135, set out as a note under section
26 of this title.

Effective Date of 1998 Amendment

Amendment by Pub. L. 105–206effective, except as otherwise provided, as if included in the provisions of the Taxpayer Relief Act of 1997, Pub. L. 105–34, to which such amendment relates, see section 6024 ofPub. L. 105–206, set out as a note under section
1 of this title.

Effective Date of 1997 Amendment

Pub. L. 105–34, title X, § 1053(c),Aug. 5, 1997, 111 Stat. 943, provided that: “The amendments made by this section [amending this section and section
901 of this title] shall apply to dividends paid or accrued more than 30 days after the date of the enactment of this Act [Aug. 5, 1997].”

Effective Date of 1986 Amendment

Amendment by Pub. L. 99–514applicable to taxable years beginning after Oct. 22, 1986, see section 655(b) ofPub. L. 99–514, set out as a note under section
852 of this title.

Effective Date of 1964 Amendment

Amendment by Pub. L. 88–272applicable to taxable years of regulated investment companies ending on or after Feb. 26, 1964, see section 229(c) ofPub. L. 88–272, set out as a note under section
852 of this title.

Written determinations for this section

These documents, sometimes referred to as "Private Letter Rulings", are taken from the IRS Written Determinations page; the IRS also publishes a fuller explanation of what they are and what they mean. The collection is updated (at our end) daily. It appears that the IRS updates their listing every Friday.

Note that the IRS often titles documents in a very plain-vanilla, duplicative way. Do not assume that identically-titled documents are the same, or that a later document supersedes another with the same title. That is unlikely to be the case.

Release dates appear exactly as we get them from the IRS. Some are clearly wrong, but we have made no attempt to correct them, as we have no way guess correctly in all cases, and do not wish to add to the confusion.